Is it even illegal to hack Ethereum? Some purists would say the smart contract was behaving as written.
The DAO was pumped up by VCs and friends of the founder of Ethereum, which, before the launch, attracted some people who had clout from the big banks and enterprises, ergo, if the DAO failed then Ethereum failed in the eyes of the most lucrative customers & developers there.
The thing that pissed of purists so much was, that when it first came out it was marketed as this beautiful "world computer" that would be incorruptible by anyone, but the hard fork made it apparent that the values of the Ethereum community had changed to value support of banks & business over that idea.
I was at a conference this week and watched a lecture by one of the founding board members of the Enterprise Ethereum Alliance, who was getting the crowd fired up about the idea of ICO's, and then directly after his talk, David Birch from Consult Hyperion came on and said that people who are involved in the launch of new tokens in this current feverish phase are extremely likely to go to jail for fraud. Was hilarious
Edit, just to give people an idea of where he's coming from ideologically, these are some of his comments that show the kind of world he wants to see:
https://youtu.be/c8mdr8iwX20?t=6m49s
"law-abiding taxpayers like me are subsidizing criminals to use cash and not pay taxes"
https://youtu.be/c8mdr8iwX20?t=10m47s
"so getting rid of cash has some other benefits which will lead to unexpected changes. For example for economists, getting rid of cash means that you lose the zero lower bound on interest rates. You can't have interest below zero because if you drop interest rates below zero people will just draw out the cash and just hold it. If you don't have cash you can have negative real interest rates. So getting rid of cash has a lot of benefits."
https://youtu.be/c8mdr8iwX20?t=13m55s
"So if you allow us technologists to build the stuff so we build something like Bitcoin which let's pretend it's anonymous. Do you know what you get if you let us build that? You get a giant electronic Somalia. If you want to live in a society which is entirely driven by anonymous cash, where the rich aren't accountable anymore, where whoever's got the most money can be the warlord and do what they like, well that's what you're letting us build now"
His demonization of cash remind me of this:
"The cashless society – which more accurately should be called the bank-payments society – is often presented as an inevitability, an outcome of ‘natural progress’. This claim is either naïve or disingenuous. Any future cashless bank-payments society will be the outcome of a deliberate war on cash waged by an alliance of three elite groups with deep interests in seeing it emerge"
https://aeon.co/essays/if-plastic-replaces-cash-much-that-is...
Bubbly sectors see irrational amounts of money thrown at things that have little underlying value, like Beanie Babies, or a token for a proposed protocol described by a two page whitepaper.
Ponzi schemes are financial frauds where, under the promise of high profits, users put their money, recovering their investment and interests only if enough users after them continue to invest money.
Further to this, its qualatively provable, as you can look at the contracts and actually class the type of Ponzi scheme they are.
* https://ftalphaville.ft.com/2017/06/01/2189634/its-not-just-... https://stratechery.com/2017/tulips-myths-and-cryptocurrenci... * https://arxiv.org/pdf/1703.03779.pdf
A ponzi scheme is where people pay a fee to join a scheme where members are guaranteed a payment that comes out of the membership fees paid by members that join after them.
No token sale has given out payments, let alone guaranteed one. A speculative price gain is not a "ponzi scheme".
>is a fraudulent investment operation where the operator generates returns for older investors through revenue paid by new investors, rather than from legitimate business activities.
The operator pays revenue to those who joined earlier with the fees received from those who joined later.
https://en.wikipedia.org/wiki/Ponzi_scheme
Most ICOs seem more like pump-and-dump by that nomenclature, than like true Ponzi schemes, in which the Ponzi operator is directly involved in all of the transactions in and out of the system.
This is a good discussion: https://www.bloomberg.com/view/articles/2016-06-17/blockchai...
Given the number of people involved, it could even be juged as organized crime against one person...
Instead, as others have pointed out, the hard fork demonstrated that this was not at all the case. Ethereum contracts can be voided, and the entire premise is therefore flawed. Terms and conditions would just be another way that contracts could be voided, another flaw.
All the use cases I've seen depend on external input to be even moderately useful. But once you depend on unverifiable and potentially fraudulent external input, the supposed unique value of these scripts is lost. The notion of "oracles" just moves the problem elsewhere so it can be dismissed.
When and if we see profitable uses of these block-chain scripts then I would be glad to revisit this assessment. Until then it looks to me like a classic case of a technology looking for a problem.
I disagree. The code must also refer to the implementation of the Ethereum clients, and the collective will of the network participants. Those are implicit provisions of the contract, specified in advance. The Ethereum Classic chain still exists, and the thief is welcome to use it. People have simply voted with their feet and prefer a world without the theft. There is no breach of contract, anyone is free to fork the Ethereum network in any way, at any time. It is up to the users to decide how much value to ascribe each fork.
If the premise is "the code is the contract, period, except we reserve the right to change the contract at any time or even to cause the contract retroactively never to have existed, based on implicit or subjective factors decided by humans and not by code", then it's a very different beast.
There's no way of framing this that preserves the philosophical purity.
It's the same thing with Communism/Socialism. Communism is the pure end state, utopia, etc.
Socialism is the ugly road there.
Now, of course we know Socialism usually does a 5 minute walk in the park then turns 90 degree at that big pine tree, and when no one's watching puts on the evil hat, and by the end of the hour it's a totalitarian state! No iteration on ideas, criticism is met with GULAG, no education, teachers and thinkers are decadent freeloaders, enemies of Communism, internment, execution, mass murder! You know the drill.
Etherum and other code is law experiments are trying to find the best expression of that "common sense" platform, they are trying to craft the best Constitution for this. "And no true Scotsman claimed that Etherum/DAO is perfect." (This is the part where semantics is fuzzy, as it really depends on who said what, when, how, why, and to whom. But realistically, anyone who claimed to get it right the first time, was too optimistic, and of course, it was "reviewed", http://piratepad.net/theDAOreview [ https://www.reddit.com/r/ethereum/comments/4hkgsz/a_summary_... ] and see .. but never audited - https://www.reddit.com/r/ethereum/comments/4ota1q/the_truth_... .)
Somebody exploited a flaw in the system and managed to grab millions of funny-money currency. It's like cheating at a game of monopoly except that many of the players think the rules of the game are "the law" in real life.
So the question is, could you convince a jury that it is illegal?
The DAO was created with the intention to allocate its funds according to a certain voting scheme, with everyone's power determined by the number of tokens they held. But the program did not correctly implement this intention, and the DAO hack exploited the difference to bring the funds under control of the attacker. This most likely violated the Computer Fraud and Abuse Act, and was thus illegal.
That doesn't mean that it is legally binding.
But the question that is to be debated is, was the intention of the DAO too follow the code of the contract EVEN IF it had a bug.
There is an argument to make that, given that "the code is law" was plastered all over the DAO, that being hacked and having all their money stolen, was explicitly allowed.
Without getting too abstract, even traffic lights or zebras, from the perspective of a pedesetrian, (as an example of a simple system) would be a horrendous and extremely time consuming experience if its rules were enforced by the letter. Imagine if you could >only< pass the road accross the zebras...
Human made systems need to be imperfect and the rules need to be flexible or the system will fail.
Even countries that don't have shared extradition treaties don't always ignore criminals within their borders, even if the criminal activity is occurring outside.
In the UK, for the most serious (indictable-only) crimes, then no. But you can ask the judge to end the trial after the prosecution case if no reasonable jury could convict, including if as a matter of law no crime has been committed.